Shared ownership is a great way on to the property ladder. You buy an initial share of a home ranging from 25% to 75% of its value – and have the option to own your home outright in the future.
Buying through shared ownership means you need a smaller mortgage and, therefore, a smaller deposit than if you were buying on the open market.
In addition to your mortgage, you pay a subsidised rent on the share of your home you don’t own. This rent is usually capped at 2.75% of the property value.
And, whenever you want, you can buy bigger shares in your home until you own 100% – this is known as staircasing.
How shared ownership works
If you buy a home outright for £400,000, you need a minimum 5% deposit of £20,000. The remaining 95% would be your mortgage – £380,000.
If you buy a 25% share through shared ownership, the “total” price is £100,000 instead of £400,000. So, you need a 5% deposit of £5,000 and a mortgage of £95,000.
Eligibility for shared ownership
Shared ownership is designed to help people who can’t afford to buy on the open market, so there are some eligibility criteria:
- must earn less than £80,000 per year (£90,000 in London)
- you must be 18 or older
- you can’t be a homeowner
- you can’t have enough money to buy a home outright.
Shared ownership homes are only available from authorised providers, such as housing associations or local councils. And priority may be given to households with specific needs: eg wheelchair access or families with children.
Staircasing: buying a bigger share
One of the benefits of shared ownership is that you can buy what you can afford first and then, when the time suits, you can buy bigger shares until you own your home outright. This is a process known as staircasing.
You can staircase as many times as you like to reach 100%, though each additional share must be at least 10%. For some older homes, it’s not possible to buy a full 100% share: your lease will say if this is the case.
Each time you staircase you need to pay some associated costs, such as a property valuation, solicitor fees and mortgage fees.
How is shared ownership different to Help to Buy?
The government’s Help to Buy scheme allows you to buy a home outright with an initial interest-free equity loan to top up your deposit.
The government lends up to 20% of the value of your home (40% in London). However, you need a minimum deposit of 5% of the full property value and a mortgage for the rest of the full property price.
The government loan is normally interest free for the first five years – you then have to pay interest on the loan, as well as your mortgage.
If you sell your home without having paid off your loan, you have to pay back the same percentage of equity you borrowed, not the same amount. So, the amount could be higher if your home has gone up in value.
Before you can buy a shared ownership home, we’ll check you can afford the property. An independent financial adviser will review your income, as well as your future mortgage, rent, service charges and costs like council tax, utility bills, insurance and any regular loan or credit cards payments. They’ll also look at your credit history.
Deposit and purchase costs
You need to have enough money to cover the minimum deposit for your property, as well as mortgage fees, legal fees and our £500 reservation fee. Your deposit will depend on the value of the property and the share you buy – the minimum deposit is normally 5%.
When you buy, you have the option of paying stamp duty on the full value of your home, or only on the share you’re buying. Paying stamp duty on the full value costs more initially, but means you don’t have to pay stamp duty again when you staircase – and can mean you pay less stamp duty overall.
If you don’t pay stamp duty on the full value when you first buy, you only need to pay stamp duty again if you staircase above 80%.
Selling your home
You can sell your home whenever you want. If its value has increased you get to keep any profit on your share.
There are some restrictions if you want to sell, but haven’t staircased to 100%. Typically, you have to sell your home through us. This ensures homes are offered to people needing affordable housing.
Interested in becoming a shared owner?
We have a range of homes across the country available to buy through shared ownership.
Our homes offer different styles, sizes and price points and are sold by our property development company, Latimer Homes.
So, whether you’re looking for a luxurious city centre apartment, a contemporary mews house or a spacious, rural family home, your new home awaits.
As soon as I looked into shared ownership, it became obvious this was the best solution for me.
Meet Natalie – shared owner
“After deciding it was time to move out of the home I shared with my family, I looked into how I could achieve getting my own place. As someone who is single, I couldn’t cover a mortgage solely on just my income, so I decided to look into other options.
“I considered Help to Buy, but the properties in my local area were really expensive and not terribly big.
“As soon as I looked into shared ownership, however, it became obvious this was the best solution for me.
“I’m very happy with my flat. The block I’m in is really open, spacious and has a big hallway. I’m also in a lovely rural location and look out on to fields.
“I would definitely recommend shared ownership.”